$AAPL Home Game Earnings Preview Digest for FQ4 2016 (Part 2): iPad Commentary
(This is excerpted from my “unapologetically” TL;DR earnings preview. Full link to the 4000+ word post here. Important note + disclaimer here.)
Last 11 fiscal quarters of year-over-year unit growth/decline, GAAP sell-in reporting basis (FQ1 2014 — FQ3 2016): 14%, -16%, -8%, -13%, -18%, -23%, -18%, -20%, -25%, -19%, -9%.
Year-ago Units and ASP: 9.88M units, $433 ASP
My Horseshoe Toss for FQ4: 9.28M units, $475 ASP
Two things. iPad units “declined by noticeably less”. Second, iPad revenue FINALLY grew year-on-year, thanks to the astonishing influence of iPad Pro 9.7 driving sequential ASP from about $430 to $490.
No, iPad still can’t be considered a “growth” business by any metric, not until we see a consistent pattern of revenue growth quarters at the absolute minimum. However, there is now some “hope” that iPad can “hold the line” somewhere above $4B per quarter, at least between holiday quarters, when iPads tend to be most positively affected by seasonality. (Just for fun, the FQ1 GAAP number for iPad units was 16.1M.) Of course, if iPad Pros are on an annual update cadence, that would certainly help.
I don’t really have much to say about FQ4 — I think iPad’s YOY unit drop will again be “less bad” because of iPad Pro 9.7’s clear uptake by customers (enterprise in particular?), since iPad Pro 9.7 (and iPad Pro at all, for that matter), simply did not exist in the year-ago quarter. Against those tailwinds is iPad Air 2, which is rather close to becoming the next iPad 2…well, depending on what Apple decides to do with the “consumer full-size iPad form factor” in the coming days or weeks.
So, let’s talk about the future real quick. Will iPad Pro 12.9 be updated this holiday season? It certainly seems like iPad mini’s due for an update to the A9…will they really call it “iPad mini 5”, or is it time for a redesign, which iPad mini has never had? Meanwhile, iPad mini 4 becoming the new budget iPad mini wouldn’t be the worst thing ever, either. iPad Pro 9.7 should soldier on just fine until at least Spring 2017, leaving…
…yes…
…iPad Air 2. If I had to guess, I’d say Apple wants to keep a “consumer-level” full-size iPad around at $399, but who knows? Here’s hoping that doesn’t become iPad Air 2, which is now 2 years old.
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Index:
FQ4 2016 AAPL Earnings Digest, Part 1: iPhone
FQ4 2016 AAPL Earnings Digest, Part 3: Mac
FQ4 2016 AAPL Earnings Digest, Part 4: Watch/Other Products
FQ4 2016 AAPL Earnings Digest: Looking Ahead to FQ1 2017 (the big December quarter)
